Transferring DC pot from Aviva to Scottish Widows to avoid IFA fee?

KeiserSoze

Hi

I'm looking to potentially get an annuity with SW as they currently offer the best rate (it won't be at the moment, I'm just planning ahead). My DC pot is currently with Aviva. 

I understand that SW won't deal directly with someone unless they're an existing customer, and therefore I'd have to engage with an IFA (whom I'd have to pay a fee for) to undertake this transaction. 

Would a simple workaround to this to just transfer my pot from Aviva to SW, and then approach SW to use that to buy an annuity?

Cheers 

HappyHarry

You will likely still get a better annuity rate from an IFA than you will by going directly through Scottish Widows. 

Unless it is a very small pot, Scottish Widows sales team will charge a higher commission rate than IFAs, meaning a smaller annuity for you.

dunstonh

Would a simple workaround to this to just transfer my pot from Aviva to SW, and then approach SW to use that to buy an annuity?

You will get a lower annuity rate than an IFA as SW would factor commission into the annuity rate.      So, if the commission is say 2% and the IFA fee is 2% then you will get a broadly similar outcome.   A bit like 4x5 vs 5x4.

For larger pots, many IFAs will cap or taper their fee.    Whereas commission is open-ended.   So, in that scenario, the annuity via the IFA will be better.   For example, the if IFA fee is £1500, but the 2% commission for the provider method is £3000.

For smaller pots, an IFA may have a minimum fee, making the commission version better.